FUTA Tax Rate adjustment and Dynamics SL

The FUTA tax rate changed on July 1st from .8% to .6% on earnings under $7,000. Because of how Dynamics SL calculates deductions, we advised most clients to leave the rate at .8% for the remainder of the year. If the rate was changed on July 1st, then Dynamics SL capped the FUTA deduction based on the .6% rate times 7,000 = $42. Anyone that had over $42 in YTD FUTA computed did not get any more tax withheld. It did not take the wages below 7,000 times .6%.

This necessitates an adjustment to be made at the end of the year to correct the FUTA tax expense and liability. We have created a script to calculate the correct amounts by employee. Please let us or your consultant (if reading this from the Microsoft site and not the Boyer & Associates Website) know if you need us to run this script.

Tony Murnion from AZ in Montana originally found and posted this helpful information and Kurt Bradley from Bradley Consulting Group in Houston, TX shared it with me.